Aetna and Humana call off $34 billion merger

By Aaron Smith

NEW YORK (CNNMoney) -- Aetna and Humana are calling off their $34 billion health care merger.

A federal judge blocked the deal last month on antitrust grounds, siding with the Justice Department.

Aetna said Tuesday it will pay Humana a $1 billion breakup fee.

The deal's end casts a pall over an even larger merger proposal between two health insurance giants.

Anthem proposed a $54 billion acquisition of Cigna, but the Justice Department moved to block that, too. A federal judge in Washington agreed last week, saying the deal would violate antitrust law. Anthem is appealing.

When she sued all four companies last year to block the two mergers, then-Attorney General Loretta Lynch said the combinations ran the risk of "drastically constricting competition" in health care.

The two mergers would have left the health insurance industry dominated by only three giant insurers. The third company is UnitedHealth.

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